As Homer’s legislators get ready to head to Juneau for the start on Jan. 17 of the 30th Alaska Legislature, one big issue looms ahead: how to keep funding state government and services.
“The biggest thing is certainly going to be the budget and the revenue,” said Sen. Gary Stevens, R-Kodiak, District P. “How do we fill that $3 billion plus hole we have in the budget before we go off the cliff?”
If in the last session it looked like a straight road ahead with miles of pavement before crossing the next bridge, this year legislators drive a beater pickup truck with bad brakes and a pint of gas in the tank.
Stevens and Rep. Paul Seaton, R-Homer, the legislator representing District 31, both said that a bit more than $3 billion remains in state spending reserves. Gov. Bill Walker has introduced a budget that still has an $890 million gap between spending and revenue. That budget includes a proposed motor fuel tax increase from 8 cents a gallon to 16 cents a gallon.
The legislature can dip into state savings as it did last year — something Seaton said isn’t sustainable.
“The budget is going to be balanced this year, but the revenue may not be paying for the budget,” Seaton said.
Seaton said he will introduce only one bill, a variation of House Bill 365, the fiscal plan he proposed in the last session that died at the end of the 29th Legislature.
Each legislature meets for two years, and 2016 marked the second session of that last legislature, meaning any bills that did not pass don’t carry over into the new legislature. Seaton’s plan would create a personal income tax calculated as 15-percent of a person’s federal tax obligation. It also would allocate 25-percent of the 5-year average of Permanent Fund earnings to the general fund and another 25 percent Permanent Fund dividends. Dividends are now calculated as 50 percent of the 5-year average of earnings, although Walker vetoed half that PFD appropriation last year, an action still being tested in court.
Walker also has suggested a restructuring of the state corporate tax that would include taxing S Corporations and other tax entities not subject to state corporate taxes. A personal property tax, though, would tax corporate earnings as reported on a corporate shareholder’s personal income.
Seaton joined two other Republicans in forming a majority caucus made up of mostly Democrats, but also two independents. Another legislator in Stevens’ senate district, Rep. Louise Stutes, R-Kodiak, also joined the majority caucus. Stevens said he has no problem working with Seaton and Stutes in the majority caucus. Bipartisan caucuses aren’t unusual, something Stevens said he was part of in a majority caucus when he was Senate president.
“Over the years we’ve often had coalitions made up of Democrats or Republicans. It doesn’t mean Republicans that suddenly join the caucus become Democrats or Democrats become Republicans,” Stevens said. “It doesn’t change things at all. I have an excellent relationship with Louise Stutes and your representative there as well.”
While the new House majority seems inclined to support a personal income tax, that won’t lead to a meeting of the minds with the Senate, Stevens said. The Republican Party majority caucus in the Senate is more inclined to tap the earnings reserve in the Permanent Fund as a revenue source, he said.
“Once again the Legislature is at odds with itself and its constituents,” Stevens said. “If this were an easy issue we would have decided long ago.”
Stevens said he supports a personal income tax. The public doesn’t seem to have reached a consensus, though.
“Except I have to say my district — Homer, Kodiak and Cordova — has been understand in finding a means to fill the (fiscal) gap,” Stevens said. “I wish the rest of the state were as intelligent.”
The Legislature will be making further budget cuts, Seaton and Stevens said, but the heavy lifting has been done and there’s not much left to cut without eliminating major programs. This session, to show it has skin in the game, the Legislature has made some cuts in its own budget. For example, every legislator’s office gave up one pay range of staff time. Seaton has just two aides this session, Jenny Martin and Taneeka Hansen. Cuts have been made to the capitol building cafeteria and prices raised there.
“It’s not like it’s supposed to save our budget, but if we don’t start conserving every place we can, you don’t get there,” Seaton said. “We’re trying to make cuts where we can and not leave any stone unturned.”
Seaton has just one committee assignment: co-chair of the operating budget for the House Finance Committee.
“That’s the whole budget, basically,” Seaton said.
Except for programs that receive matching federal or grant dollars, effectively the state has no capital budget.
Stevens will serve on the Legislative Budget and Audit Committee, the World Trade Committee and the Education, Labor and Commerce committees.
Budget and audit will tackle a potentially controversial program, the Alaska Mental Health Trust Fund, and see if it’s complying — or legally has to comply — with state regulations saying the mental health trust has to invest in the Permanent Fund and can’t invest in Outside corporations.
“That’s one of the big issues we’re going to be auditing and trying to find the answers to,” Stevens said.
Seaton said Alaskans will see a change in the House in how committee meetings are scheduled. Rather than hold subcommittee meetings on the budget, committees will hold policy committee meetings made up of the same members of those committees. In the past subcommittees might be made up of several committee members. Keeping subcommittees intact will make scheduling easier and public noticing more transparent.
Seaton encouraged constituents to comment as bills progress through the Legislature. Information on bills can be found online at akleg.gov or through the Legislative Information Office.
“It’s better seeing what’s happening and what’s being discussed,” Seaton, said. “That’s why I encourage the public to participate during the process instead of waiting until the end to say whether they like it or not.”
Michael Armstrong can be reached at firstname.lastname@example.org.
Rep. Paul Seaton
907-235-2921 (local call forwarded to Juneau)
Sen. Gary Stevens
800-821-4925 (toll free)
Homer Legislative Information Office
Corner of Bartlett Street and Pioneer Avenue